Seven years after opening its Chattanooga campus near Eastgate, Virginia College will shut down its local operations Friday along with those in 70 other cities this week after its parent company lost its funding and accreditation.
The for-profit, private college, owned by the Birmingham, Alabama-based Education Corp. of America (ECA), said it was closing schools operating as Virginia College, Brightwood College, Brightwood Career Institute, Ecotech Institute and Golf Academy of America in 21 states.
The closing affects more than 15,000 students still enrolled at ECA campuses, including more than 170 enrolled at Virginia College in Chattanooga, and the shut down will cut about 30 full- and part-time jobs at the local campus.
ECA had planned to close its Chattanooga campus and 25 other campuses at the end of the school year in 2019, but the college abruptly shut down nearly its entire operation this week because the company was unable to raise more money to continue operations.
"In early fall, we undertook a path to dramatically restructure Education Corporation of America to best posture it for the future," Stu Reed, president and CEO of ECA, said in a letter to students. " However, recently, the Department of Education added requirements that made operating our schools more challenging. In addition, last night ACICS (the Accrediting Council for Independent Colleges and Schools) suspended our schools' accreditation with intent to withdraw. The uncertainty of these requirements resulted in an inability to acquire additional capital to operate our schools."
Virginia College has helped graduate or grant certificates for more than 58,000 students since its start in 1983. At the Chattanooga campus, Rebecca Vandergrif told WTVC-TV9 "I would have recommended it to anybody."
But Vandergrif is now looking for another way to gain the academic certifications offered by Virginia College at another school.
Cate Green, academic dean at the Chattanooga campus, said the sudden closing created a "very somber" mood among what she said are "some of the best students in Chattanooga."
Chattanooga State Community College said Thursday that it is reaching out to displaced students at Virginia College and will conduct an information session at 5:30 p.m. Monday in the Instructional Materials Center (IMC/Library), room 124, for students to learn how they can transfer to Chattanooga State.
Some students are also looking at Miller-Motte college, another for-profit college that operates vocational certification and medical training programs in Chattanooga.
Education Corp. of America, backed by investors including private equity firm Willis Stein & Partners of Chicago, is the latest in a series of for-profit colleges to close after allegations that they were loading students up with debt while not providing them with marketable skills.
In October, the company sued the U.S. Education Department seeking to maintain its federal funding, which was in jeopardy over its dire financial situation. A judge later dismissed the suit.
The announcement of the closing of Virginia College comes two years after the ITT Technical Institute, another private, for-profit school that once operated at Eastgate, shut down its campuses in Chattanooga and 129 other cities after the U.S. Department of Education cut off the use of federal financial aid for ITT students because the agency said too many ITT students were not graduating or finding jobs.
Virginia College has operated its School of Business and Health next to the U.S. Post Office in Brainerd on Eastgate Loop since 2011. But enrollment at Virginia College has dropped nearly in half from its peak in Chattanooga as Connect Tennessee has offered tuition-free programs at public community colleges and the improving job market has afforded many would-be students more lucrative options in the workplace.
Court documents filed by ECA said its lagging revenue left it unable to make payments on its debt or rental fees, and that it faced eviction at several campuses. ECA estimated it owed $66 million at the time a federal judge in Georgia granted a bankruptcy-like receivership meant to protect the company from creditors.
ECA largely blamed falling enrollment on an upswing in the economy, which left fewer adults heading to school for job skills, and on increased federal regulation of the for-profit college industry.
The sudden closure drew criticism from the U.S. Education Department, which said it had been working with the company to arrange a shut-down that gave students time to transfer.
"Instead of taking the next few months to close in an orderly fashion, ECA took the easy way out and left 19,000 students scrambling to find a way to finish the education program they started," Liz Hill, an Education Department spokeswoman, said in a statement.